NRAS seeks to address the shortage of affordable rental housing by offering tax-free financial incentives to the business sector and community organisations to build and rent dwellings to low and moderate income households at below-market rates for 10 years.
It aims to:
- increase the supply of new affordable rental housing;
- reduce rental costs for low to moderate income households; and
- encourage large-scale investment and innovative management of affordable housing.
What does it involve?
The scheme is aimed at low to moderate income earners, therefore applicants wishing to rent an NRAS property have to meet specified income limits. Eligible individuals and families are able to rent dwellings at 20 per cent below market value rent. According to the Department of Social Services The median weekly savings of tenants residing in NRAS homes was $87 per week in 2011-12.
Approved participants of the Scheme are eligible to receive a national rental incentive for each approved home where it is rented to eligible low and moderate income households at a rate that is at least 20 per cent below the prevailing market rates. Approved participants provide tenant data annually to assist the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) to satisfy the compliance requirements prescribed by the Scheme and to better understand the types of tenants living in NRAS homes.
The annual incentives last for ten years (indexed annually for the rental component of CPI) and are made up of two parts:
- A Commonwealth Government Incentive of $7,846 per dwelling per year as a refundable tax offset or payment
- A State or Territory contribution of $2,587.00
Making a total of $10,350.00 for 2013-14
What kind of homes are available?
One of the main focuses of the scheme is providing quality new homes, that means that the properties must be new, or refurbished and not yet lived in.
All types of homes are available under the NRAS. Of the 7,758 homes tenanted in 2011-2012, there were:
- 1,747 studios;
- 2,703 apartments;
- 2,069 houses;
- 1,234 townhouses;
- and 5 homes as subsidiary dwellings.
Where are these properties?
It’s a national scheme, and in 2011-2012, 6,225 homes were located in major cities, while 1,064 were in inner regional areas, 466 in outer regional areas, and just 3 were in remote areas, with the median weekly rent ranging from $210 in NSW to $308 in the Northern Territory.
How is the rental process managed?
The NRAS is focused on being an incentive scheme, and it does not provide tenants with any special rights over and above the relevant residential tenancy legislation in the State or Territory where the dwelling is located, tenants sign a standard lease for the property the same as for any other rental.
Prospective renters can contact one of the approved participants or their tenancy managers for available properties and NRAS rental properties may also be advertised, in Queensland, tenants must register with the Queensland Government’s One Social Housing Register.
Tenancy managers for National Rental Affordability Scheme properties may be a:
- not-for-profit organisation (such as a community housing provider);
- commercial business (such as a private real estate agent);
- Local Government; or
- State or Territory Government on a fee-for-service basis only where there are no suitable alternatives.
Approved participants may contract a service provider to manage dwellings on their behalf or the tenancy manager could form part of the consortium which makes the application.
What impact will the NRAS have?
It could be suggested that by lowering the rents of Commonwealth Rent Assistance (CRA) recipients the NRAS will reduce the total expenditure on CRA recipients. It could also be speculated that while the impact of the scheme will vary across the country, it will be more effective in regional and remote parts of Australia, where a greater proportion of CRA recipients could be lifted out of housing affordability problems.
Critics of the scheme have highlighted inequalities in take up rates between the States and Territories. For instance, the scheme has had a higher take up rate in Victoria and Queensland compared to NSW. Some argue the flat rate of investor incentives disadvantages places like NSW, where higher land costs make projects less viable for investors.
In the long-term, the NRAS can only have a positive affect on the availability of affordable housing for low to moderate income earning families as well as providing an alternative form of investment for property investors who can see the benefits of owning an NRAS property.